August 20, 2008

US-based private equity (PE) major General Atlantic is learnt to be final stages of talks with Wockhardt Hospitals to invest around $140-150 million. Although there are some differences over the valuation and structure of the investment, the PE may pick up around 20% stake in the Indian company, sources said.

The hospital chain has been in talks with several PE funds after its initial public offer (IPO) got derailed earlier this year. Talks with most PE funds had also fallen through over differences about the company's valuation, PE sources said.

In January, Wockhardt Hospitals had planned to raised around Rs 688-762 crore by diluting 24% of the post-issue paid-up equity share capital of the company. To tide over the then prevailing low market sentiment, it had also reduced the IPO price from Rs 280-310 to Rs 225- 260 but the company fail to get enough subscribers to go ahead with the public issue.

According to General Atlantic's website, the company manages approximately $17 billion in capital under management and invest between $1 billion and $2 billion every year globally. The company's investment size ranges from $50 million to $500 million. If the deal goes through, it would be General Atlantic's first investment in the Indian hospitals. The American company had also picked up 8.5% stake in Delhi-based pharma company Jubilant Organosys for Rs 109 crore in 2005.

Wockhardt Hospitals has chalked out a Rs 900-crore expansion plan, which includes setting up of 11 new hospitals mostly in tier-II cities. The company also plans to increase the number of beds to 2000 by end of this fiscal from the current 1,400 beds spread across its 15 hospitals. It also plans to scale up the operations in several of its existing hospitals.

According to industry estimates, the booming healthcare industry is expected to see around $5 billion between 2008 and 2011. Last year, Apax Partners had invested $104 million in Apollo Hospitals for 13% stake.

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About Me

Resident Ophthalmologist at a Chennai based Eye Hospital group. Also co-founded Bhumi, one of India's largest and best youth volunteer Non-profits. Our volunteers are involved in supplementary education for under-privileged children across several states of India